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The Town of Lansing has been struggling with having money in the bank.  Or, to be more precise, struggling with how to manage the money it has in the bank.  The Town has about $3 million in fund balance, but no real plan for managing it.  Town Supervisor Kathy Miller has been trying to establish a policy for managing the money for more than two years, but the Town Board has not been able to agree on a fund balance policy, or even on whether the Town needs such a policy.  They do seem to agree that the fund balance has grown quite large.  And that has prompted ongoing discussions about how to manage the money.

"I don't view this as a partisan thing," Miller says.  "When you go to the state training sessions you don't know if you are sitting there with Republicans or Democrats.  The questions that come up are very good.  You hear about towns that have been in trouble and are there to try to figure out how to get out of it.  Those are the stories you pay attention to.  I don't want Lansing to go there.  I want to put us in a position so that we will never be there."

Miller is referring to fiscal training sessions for elected officials offered by the office of the New York State Comptroller.  Miller argues that putting a fund balance policy in place and establishing reserve funds will have many benefits including saving money for expected capital projects and equipment purchases, stabilizing the tax rate, improving the Town's financial rating so it can obtain better, lower cost loans, among others.  She says it will be better for the town to proactively develop its own policy before the state decides to require municipalities to do so.  And having a fund balance policy in place will avoid the town being flagged by the state and financial ratings services for not having a policy.

"Everybody is talking about this," Miller says. "All the other mayors.  All the other supervisors.  Bolton Point Water Commission is talking about it.  The county health consortium is talking about it.  Because this is what's coming down from the Comptroller's Office.  I've taken five training sessions now with the Comptroller's Office, some a day long, some for two and a half days.  They all believe that we need to start paying attention to fund balance for a healthy municipality or municipal service like Bolton Point.  You need to have a fund balance policy."

Miller says a key reason to build reserves is that it means the Town won't have to borrow money.  Lansing has always been known for conservative spending, and currently owes little or no money.  The districts (water, sewer, etc.) do borrow money for projects, but the Town itself is able to simply pay its expenses.  In April it was announced that the Town had received a quite favorable Aa3 rating from Moody's Investor Service.

More and more municipalities are being encouraged by the Comptroller's Office to put fund balance policies in place, and worries that if Lansing doesn't develop one now it may be forced to in the future.  Miller also says that having one in place could help the Town to get an even better Moody's rating than it already has, which will make it easier to borrow when needed, and at lower interest rates.  While building up reserves costs a little more in the short run, it saves taxpayer money in the long run because the Town can simply pay cash when it needs something, and isn't stuck with interest payments on bonds or loans.

When we say 'a little more in the short run' it does not mean more than we have already been paying.  It means the same 'little more' that we have been taxed in the past that has allowed the fund balance to rise as high as it has.  So Miller's proposal is not a plan for higher taxes.  It is a plan for better managing the taxes that are already being collected. 

One of the reserves Miller has her eye on has nothing to do with equipment or building projects.  It would be a rate stabilization reserve, to help protect taxpayers from unpredictable circumstances such as an unexpected drop in reassessments, or the sudden closing of the power plant, that would otherwise raise the tax rate for the average property taxpayer.

"Right now Tops is asking for a million dollar decrease in their assessment," she says.  "A couple of years ago we had someone ask for a decrease in an apartment building.  What if there was a downturn in our real estate and all of a sudden we lose five or six million dollars in our assessment?  We could pull from this Rate Stabilization Reserve. "

Miller says if you put money into reserves or restricted funds, when you need to buy something you have the money on hand without depleting the fund balance, which is there to pay for things that are unexpected.  That defines a fund balance policy clearly.  Fund balance is for unexpected expenses like a roof collapse or fire or flood damage to municipal property.  Reserves are for expected expenses like a new truck or snow plow, or lawn mowers for the parks.  They insure that when you need this equipment you can just pay for it without borrowing.

"One percent interest on four or five hundred thousand dollars is a lot, and you pay it out over 20 years," Miller says.  "How much interest are you paying on that machine?  The Comptroller has said that the municipalities that get into trouble are the ones that have borrowed the most."


The Village of Lansing has been quite good at managing municipal projects this way.  Even when the cost of its new Village Hall turned out to be significantly more than projected, the Village was able to pay for the building without adding taxes.

But the clear champion of fiscal planning in Lansing is the Lansing Fire District.  Thanks largely to District Treasurer George Gesslein, the district has a successful fund balance policy that includes a 20 year equipment replacement plan.  Credit also goes to the fire commissioners for using the plan effectively.  In addition to predicting purchases, this plan also predicts the Fire District tax rate, with only a few cents rise in two decades.  Despite these tax rate predictions the District has managed to lower its tax rate some years.

This plan isn't 'set in stone' -- fire commissioners often postpone replacing fire trucks when the equipment outlasts its expected usefulness, or move a project ahead of schedule when needed.  By using their plan as a guide, they have not only been able to keep essential equipment up to date, but have embarked on a series of major and minor capital improvements, one of which was building an entirely new fire station in the Village of Lansing, without having to borrow or assess additional taxes.

Miller says a she would like the Town to put a fund balance policy in place that would allow the municipality to come up with a similar plan.  The key different between the Fire District plan and the Town department plans is that the Fire District plan is backed with money assigned to reserve funds for specific purposes.  A little is added each year so the total will be available when it is needed. 

"That's what we should have, going forward," she says.  "We should have a list of what we need to purchase in what year.  In 2016 we need to buy this.  In 2017 we need to buy this.  The Highway Department has one of those and we need to incorporate it into a future plan.  The Rec Department has the same thing, because they have equipment, too."

Town department heads currently have to ask for money from the Town Board whenever they need to replace major equipment.  These funds may or may not be granted, depending on circumstances, politics, or just the fiscal philosophy or best practices of the current board members.  Miller says that reserve funds protect the departments, and therefore town residents, from shifts in political winds and insure that essential services can be maintained, while preserving any Town Board's ability to pursue new projects it deems important at any given time.

"They feel better when they know the money is there, when they know they can get that equipment," she says.  "Let's face it.  They know what they need.  I don't think any of (the Town department heads) are dishonest or padding.  They should know, going out, in the year 2018 I can get this.  In 2020 we can get this.  I think that lends stability to what you're doing.  It will lend stability to our tax rate.  We'll be able to get a tax rate that we can sustain and maintain and know we're going to be able to pay for all our services."

She says that can also mitigate tax rises when there are economic downturns.  She notes that right now there has been a drop in sales tax revenues nation-wide.  In New York the Comptroller's Office recently reported that sales tax in New York was down in the last quarter. 

"There has been a general downward trend in sales tax collection growth over the last several years and that is continuing in 2015," said Comptroller Thomas P. DiNapoli earlier this month . "The slow growth in sales taxes could pose fiscal challenges for local governments across New York, especially for counties who rely heavily on sales tax collections to pay their bills."

Once taxes have been collected the fund balance helps pay for unexpected drops in planned income.  Again, Lansing has a history of conservative projections in this respect, but any municipality is subject to surprises.  Flooding in the past couple of years in South Lansing,  Autumn Ridge and Waterwagon Road comes to mind.  Miller acknowledges that FEMA (Federal Emergency Management Agency) will help in case of major disasters such as flooding, but notes that the municipality has to pay upfront, and then goes through the federal process to be reimbursed.


"The comptroller suggests that anywhere from 17% to 25% of your budget should be in your unrestricted fund balance.  It means you can use it for what you need it for.  If you do use it, it goes down, but you try to maintain it between 15% and 25%.  It makes perfect sense."

Miller says that a fund balance policy would mean assigning the rest of the fund balance to various reserve funds.

"We can make predictions about this stuff," she says. "Are they going to be 100% correct?  No.  The idea of reserves is that when we need to do these things we have projected, we have the money to do it.  If something comes up and we haven't put aside money, we can go to the unrestricted fund balance and make our town whole if something breaks down."

Miller adds that insuring that these departments' needs are funded allows them to run more smoothly and concentrate more on what they do best.

"I think people truly appreciate that we have some of the best roads in the county," Miller says.  "Look at the state roads.  Look at the county roads.  Then look at the town roads.  We really are trying to do a good job.  Look at snow removal... the kinds of things that we do that you take for granted.  We really do a good job in the Town.  We have one of the best,if not the best Recreation departments in the county.  Look at the camps and services our kids get, and a lot of it pays for itself.  But we need to support them, too, because it's a good thing for our kids."

So far it has been a hard sell.  Last year a majority of the Town Board were not convinced that an official policy was needed.  They did fund some equipment after department heads pleaded for it, particularly a major truck purchase to replace a defunct one.  This year Miller has been arming herself with reams of studies, policies and recommendations to help make her case.  While she would love to have a 10 or 20 year equipment/capital plan, she says that is far too ambitious for now.  First she wants a policy, and then reserve funds that will enable a solid five year plan.

"I'm going to try to get it done this budget period," she says.  "I want first off to pass a fund balance policy.  " would like a five year plan to start.  Let's not bite off more than we can chew.  Let's do the five year plan.  And we have some big purchases coming up, especially in the Highway Department. Let's put that money in reserves so it's there when we need it.  We may need a new roof (on the Town Hall), so we need a maintenance fund.  Do we have enough money?  We know we need to predict what we need for technology.  I don't expect to get all the money in reserves all at once.  That's impossible.  Can we seed it with money and start moving forward?  I hope so."

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